Scan 3
Musical Courier 1927-08-15: Vol 95 Iss 4, 1927
30 lines. Read by computer on 27 September 2026. No printed page number was found. See the scan on archive.org.
1turer and the dealer. Here is an overhead that is passed on to the eventual buyer, the one who buys a piano for his home, and in this we see a recklessness that adds to the difficulties of retailing selling—the prices of pianos at retail after accumulating all this overhead in the process of arriving at the completed instrument before the prices at retail are made. There is an accumulation of percentages that arrives to comprehension in the term "mark up," and in this mark-up there must be included all that accumulates in the way of overhead. In this is involved every item after the piano is completed until it arrives in the home of the ultimate purchaser, and brings in much that is of account in what we term the costs of distribution.
3The Costs of Distribution
5Here is where the scalpel should be used with discrimination. In this cost of distribution there must be considered all that is spent by the manufacturer in the creating of name value, the costs of personal contact after printers' ink has been used, the displaying of the instruments to attract the attention of the dealers, or in the selling to the dealers, and then must again appear these same costs in a different manner what is involved in the dealer doing to the ultimate buyer what the manufacturer has done to him in the selling at wholesale. If all this be directly tabulated, that is the costs of selling to the dealer and adding to this the costs of selling to the ultimate consumer, it will be found, the writer believes, an aggregate that will be as much as the cost of manufacturing the piano within the walls of the factory.
7Now here is where the association ideals should be brought to work in whatever good these ideals can be applied. There is little assumption of these details that would be of benefit to the entire problem of making and the two selling processes that are involved in the giving to the people the piano as a musical instrument. There are wastes to which the association idea applied directly would bring about that lowering of overheads in both sections of the industry and distribution that would be of value.
9Millions Have Been Spent
11It is costing the piano business more than half a million of dollars per year to carry on the association idea, and while this has been going on and increasing each year from the small beginning thirty years ago, there is no one who can in any way show that the association idea, after an expenditure, or the adding to the overhead of piano selling many millions of dollars, this in cold cash, and not in instalment paper, has given anything that is of any great value.
13If the association idea could be applied directly in this direction of cutting percentage here and percentage there, this overhead as to distribution could be reduced in items that seem small, but which in the aggregate would be of a volume that would be astonishing. As it is we have the whole proposition boiled down to the one expression, "the dealer pays the bills of the costs of the association idea," which is not true—it is the ultimate buyer that pays the bills.
15We all must admit that if prices of pianos were lowered as to retailing the public could be approached with much more confidence by those who are doing the work of keeping the wheels of the piano factories running, yet there is a waste that germinates in the association idea that is one of the great factors in the building to the costs of selling. With two streams adding to the costs of distribution, much of this spent in the maintaining of an expensive organization to keep alive the belief that the association idea will solve all these problems, there is a growing dissatisfaction being expressed by the thinking men of the piano business that much money is being wasted in misdirection that can be done away with, and that this void as between the distribution costs in both branches can be dissipated if only the work of the association organization, which the ultimate buyer has to pay for in the buying of a piano, can be absorbed in profits that will accrue to both manufacturer and seller.
17President Irion's Attitude
19Hermann Irion, the President of the Chamber of Commerce, is endeavoring to arrive at some solution of all this. He believes that the overhead of the Chamber of Commerce should be utilized to the end that direct results as to the eliminating of wastes shall be brought about, and has assumed a militant attitude as to the functioning powers of the great organization that is represented in the Chamber of Commerce, which is but an addition to the costs of overhead in the way of expense of distribution and which bears upon both ends of distribution costs.
21Let it be taken into consideration that the overhead of the dealer starts with his rent. Whatever he pays in this direction actually fixes his costs of selling, and means a profit or loss as to the results of the investment or capitalization, whether this capitalization be shown in his assets as instalment paper in hand or cash in the bank. We must assume that the dealer with a running business has a capitalization that is intangible in the fact that he can assemble a buying power three times the amount of his cash capital in the credit he can command, and which is estimated to be double the amount of his cash capital. But this intangible capitalization rests in his personality and his methods of doing business. This prevails in practically all commercial contingencies as between the producer and the absorber, while the dear public that furnishes the power of this excess intangible capitalization supplies the excuse.
23If only the Chamber of Commerce under the direction of Mr. Irion would but take up this problem, would but lend a hand in this direction of arriving at understanding as to distribution costs, then would there be results and excuse for the Chamber of Commerce. Will any one who has watched the association idea as represented in the Chamber of Commerce since its inception at Manhattan Beach thirty years ago indicate in any manner what has been done to assist in reducing the costs of distribution, or in the lassoing the costs of distribution, show what has been done that will give a resultant credit to the millions of cash that this association experiment has cost the piano men? If so, let us have it.
25A Plan That Will Help
27President Irion has definite ideas as to this creating a credit, which means a profit to the piano trade in both sections, and the thinking men should rally around President Irion and give him support. His is no easy position if he maintains these somewhat revolutionary ideas, but he is strong enough to make the effort. It but remains for the members of the associations that go to make up the central body as the Chamber of Commerce to really indicate their spirit of desiring to create a profitable return for the millions that have been and are being spent without any showing that arrives at a reduction of overhead of such proportions that will enable the overburdened piano with its carrying charge, of mark-up that will place the piano in every home that wishes to be within the bounds of receptivity of our so-called civilization. America is musical, and the piano men must take advantage of this, but must be honest with themselves and with the people they elect to serve.
29William Geppert.
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